Tuesday, March 09, 2010

When is it worth $1.9 million to invest in a money-losing golf course?

Answer: When the golf course is near one of the wealthiest parts of Montgomery County. The Montgomery County Revenue Authority, which tried to close Sligo Creek Golf Course because it said the down-county course was losing money, wants to spend $1.9 million in county golfers’ money on improvements to the Poolesville Golf Course in western Montgomery County.

Let’s compare the two-golf courses.

Poolesville is an 18-hole course on West Willard Road and is the westernmost county course. It is half-an-hour from one of the county’s most popular courses, Falls Road. In between the two courses are Potomac and North Potomac, where coincidentally or not, a majority of the Revenue Authority board members reside. Poolesville had 35,000 rounds of golf in fiscal year 2008 and 30,000 rounds in fiscal year 2009.

Sligo Creek is a 9-hole course on Sligo Creek Parkway and is the only county course below the Beltway. Sligo had about 30,000 rounds of golf in fiscal year 2008 and about 25,000 in fiscal year 2009. By comparison, the county’s most popular course, Needwood, had 71,000 rounds in FY2008 and 65,000 in FY2009. (All county golf courses lost rounds last year because of awful weather.)

Both Poolesville and Sligo struggle to break even when you consider just expenses and revenues, and both courses lose money, more than $160,000 apiece in FY2009, when you add in the management fee charged by the Revenue Authority in Rockville for the costs of its bureaucracy.

In recent years, the Revenue Authority has offered substantial discounts through online tee-time sites to try to lure golfers to Poolesville. And of course the Revenue Authority tried to close Sligo but was blocked when the County Council came up with $150,000 to subsidize Sligo this year.

The Revenue Authority has now proposed a six-year capital improvements program (CIP) that would spend about $10 million of its golf revenues on county golf courses. It includes $1.9 million for the Poolesville Golf Course to add a new food and beverage area to the golf shop building, demolish an old unused clubhouse, replace the irrigation system and build a new parking lot.

Now, $1.9 million is roughly what it would cost to build a new irrigation system and clubhouse for Sligo Creek Golf Course AND replace the bunkers and make some other fixes. The Revenue Authority has argued that it does not make sense to invest its money in Sligo because the course would never generate the revenues to cover the cost of the projects.

At last Thursday’s meeting of the Planning, Housing and Economic Development Committee, Council Member Marc Elrich effectively exposed the Revenue Authority’s double standard when he pointedly asked if the courses included in the CIP could cover the cost of the projects with revenues from those courses.

The Revenue Authority’s executive director, Keith Miller responded that the projects were not “revenue enhancements” but were designed to maintain the golf course system as a whole.

Elrich asked specifically whether Poolesville would generate enough revenues to cover the cost of the $1.9 million in capital improvements. Miller responded that the old clubhouse is unsafe and that the irrigation system has to be replaced to maintain the course.

Finally, when Elrich pressed Miller again, noting the difference between the argument now and what was said "about another course," Miller responded that Poolesville was the only county course in the western part of the county.

This is not to knock Miller, who is working with the Sligo Golf Course Golf Association to come up with ways to use volunteers and fund-raising efforts to keep Sligo going.

The Sligo Creek Golf Association and its representatives on the county’s Sligo Creek Golf Course did not ask to be included in this year’s CIP or for another subsidy. Instead, the task force recommended that the county explore the option of asking a private operator to take over Sligo. The Sligo Creek Golf Association also is planning its own fundraising efforts to invest in improvements at the course.

But we also agree with Miller. The county’s nine golf courses should be considered a system and it is important that every area of the county be served, including if necessary by using revenues from the most popular courses to make improvements at the less-utilized courses.

We have no wish to stop the improvements at Poolesville and the other courses. But we also believe that the County Council should make a decision about Sligo’s direction before it gives final approval to the Revenue Authority’s spending plan.

Woody Brosnan is the Chairman of political outreach for the Sligo Creek Golf Association.